UK - The liveweight sheep market is likely to remain under pressure into the new year due to a combination of subdued demand, plentiful supply and increased numbers of out-of-spec animals being marketed.
While Defra statistics show that the kill level was only one per cent higher in August this year than last, average carcase weights are up two per cent while lamb numbers for September are estimated to be up three per cent compared to the same month last year.
The Muslim festival of Eid-al-Adha, which falls this Friday 3 October, may prove to be a short-term shot in the arm for prices – as we are already seeing with a significant uplift this week – but EBLEX sector director Nick Allen believes supplies will be plentiful through to the new year.
“There is always a seasonal drop in price as we hit peak supply levels for the market for sheep meat in October, but there are a number of factors at play which mean, this year, numbers are higher and they are coming onto the market sooner,” he said.
“There is no question that supply is outstripping demand at the moment, not just here but on export markets too. France, for instance, is our most important export market for sheep meat and they are struggling with a poor economic situation. The strengthening of Sterling against the Euro has done no favours for the trade in this region.
“Estimates indicate lamb numbers have been over three per cent higher this September compared to last. These increased numbers have likely been compounded by increased carcase weights, which also suggests more are being slaughtered out of spec. This pulls down the average price – though it should be noted that good values can still be obtained by those marketing in-spec.”
Year on year, average weights are up 0.4kg to 19.1kg. This can be put down generally to better food availability and good weather, which has allowed farmers to easily add weight to their stock.
While there has been much talk of the availability of imported product from New Zealand, levels were around five per cent down in August, while prices are up 14 per cent compared to a year ago. This means it is unlikely to be having a significant negative influence on the British market.
“We do think there are still a lot of lambs out there that have not come forward, so the plentiful supply situation could carry through into next year,” added Nick.
“The price will recover, but it will take time. It is vitally important that producers sell when they hit spec rather than holding on to them just hoping for the price to turn the corner. It may be a while before it goes up significantly. In the meantime, you have the costs of keeping them and you may find that too much weight is added, meaning that less-than-optimal prices will ultimately be achieved anyway.
“Sell when they are ready and look at what costs you can alter to help manage price volatility, which is an inevitable factor when involved in a global marketplace. Managing volatility as well as possible is key to ensuring you get the best returns on your sheep enterprise in this day and age. Look at what you can influence, rather than simply waiting on price alone.”
EBLEX has recently launched a significant lamb marketing push on the home market, including television advertising, online and social media campaigns to lift demand for lamb. It is also continuing its on-going work to stimulate demand in important export markets, with a key focus on France, where promotion of the Agneau St George brand is helping differentiate English product to consumers.
In addition, EBLEX has been involved in a successful bid to get European funding to help bolster generic lamb promotions, which will come online next year in conjunction with a number of other European countries.
|TheMeatSite News Desk||Read more EBLEX News here|